There's ever such a slight problem with this industrial strategy for ARM

Apparently we should try to sell what we don’t own. There’s a part of the criminal law that deals with that sort of thing:

There’s one way to save Arm from Nvidia – sell it to someone else

Who is doing the selling here? As far as we can see that’s Softbank. So, who is this who should be selling ARM to someone else? Us? We don’t own it. Britain doesn’t own it, the country doesn’t, the political class doesn’t. So, how can any one of those “we”s sell something it doesn’t own to someone else?

It has been said before but is worth repeating: selling to the highest bidder and crossing your fingers is not a credible economic strategy. For all the talk about the UK devising a proper industrial policy, we seem perfectly happy to stand aside while our best and brightest businesses are picked off at will.

The point being that that is a credible economic strategy and it’s the only effective one in any long term manner. The underlying being that no economic system without private property manages the desired feat, of increasing the amount of property and riches that can be and are enjoyed by the general population. The ultimate definition of private property is that one may dispose of it as one wishes. Refuse to allow that and one is abolishing that crucial underpinning of the prosperity machine.

There are corollaries here. The highest bidder, putting down their own money, is by definition the person to whom that asset, that property, is worth the most. Economies function efficiently when those who can best make use of something are those making use of it. Moving an asset from a lower to a higher valued use is the very definition of wealth creation.

The long term effect of all of this is that more productive assets will be created by entrepreneurs over time if current and extant assets can be sold to the highest bidder. Rather than, say, with the permission and at the behest of whichever groupuscule of PPE graduates have managed to kiss enough babies to gain political power. GOSPLAN telling everyone what to make didn’t work out well. The same system applied to who may own it after it has been created won’t either.

Tax Justice UK seem to have a problem with numbers

Or perhaps it is logic that’s escaping them. We’re told that their focus groups produce the information that everyone’s entirely willing to pay more tax to gain more of that lovely state goodness. Which is a bit of a problem for the other major work of Tax Justice UK, complaining about how many people dodge too much of the bill for lovely state goodness. But let us leave that little difficulty aside.

We all all for more tax they say. Except:

According to our research, 74% of people want to see the wealthy taxed more, including 64% of Conservative voters. The proportion of Conservatives who said they were personally prepared to pay more tax went up from 41% in March to 46% in June. Conservative backing for an increase in corporation tax leaped from 61% to 74% over the same period.

Ah, no, you see that’s a minority in favour of paying more tax. It’s a majority in favour of other people paying more tax. Which really isn’t the same thing at all, is it?

As ever the answer depends upon the specific question asked. “Would you pay more tax to fund diversity advisers?” gains a different answer from “Should he, over there, pay more tax to fund you?”

You'll never guess who owns the politically allocated property

No, really, you won’t:

A commercial farmer has been evicted from his land in Zimbabwe six weeks after the government announced a “historic” deal with dispossessed white landowners.

Martin Grobler, 63, and his wife Debbie were given hours to vacate their home by the new owner, an official from the lands ministry, who arrived with a sheriff, a court order and a lorry full of police.

Isn’t that a terrific surprise? It’s the same feature of political allocation of property that leads to councillors sitting on the housing committee gaining dobs on 3 bed mansion flats owned by the council. When it is political power that determines allocation then those with political power will be allocated to.

The advantage of it being money that decides such allocations is that you only gain money - in a free market system - by producing something that other people will voluntarily give you money for. That is, it is necessary to benefit other people before gaining title to that property. Instead of, under a political system, first gaining power by promising all sorts of benefits then enjoying the property without necessarily delivering them.

Just another one of those joys of the market - results first, rewards later.

Interview with Rainer Zitelmann

For those of you who missed our webinar, The Wealth Elite: what makes the super rich tick? featuring an interview between ASI President Madsen Pirie and author and historian Rainer Zitelmann, we have reproduced the interview for our blog.

Dr Rainer Zitelmann holds doctorates in history and sociology. In the late 1980s and early 1990s, he worked at the Central Institute for Social Science Research at the Free University of Berlin. He was then appointed section head at the major daily newspaper, Die Welt. His recent book, The Wealth Elite, delves into the subject of this webinar.

Dr Madsen Pirie is the co-founder and President of the Adam Smith Institute, a UK neoliberal think tank which has been in operation since 1977.

1. You’ve written several books about rich and successful people. What is it about them that interests you?

Zitelmann: Lots of people dream of being rich – just think of the millions who play the lottery week in, week out. Then there are all the books about getting rich – some are good, most are bad. But there are hardly and scientific studies about becoming wealthy. So that’s why I wrote my study, The Wealth Elite. 

I followed that up with another study. Not about how to get rich, but about popular attitudes toward the rich. I was mainly interested in researching stereotypes of and prejudices against rich people. And there was no definitive scientific work on this subject either. There are thousands of books, articles and essays on prejudices about black people, women, homosexual people, etc. Researchers have also published countless studies on prejudices against the poor, the disabled and the overweight, but no major scientific study had ever investigated prejudices against the rich, which is what prompted me to write The Rich in Public Opinion.

2. Your new book, The Rich in Public Opinion, is about what people in different countries think about rich people. Without going into too much detail, how did you set about finding out the different attitudes people have about the rich?

Zitelmann: Well, we started by asking representative samples of people in the United States, Germany, Great Britain and France dozens of questions. Analysing their responses, three groups emerged: social enviers, non-enviers and ambivalents. The characteristic feature of the social enviers is that they do not primarily want to close the gap between themselves and the financially successful by improving their own situations, but by making life worse for the rich – by taking things off the rich.

3. Following on from that, does the attitude of the Anglo-American people differ much from that of people in Continental Europe?

Zitelmann: That is certainly the case. I just mentioned the enviers and non-enviers we identified. Well, for each country we calculated the relationship between the two groups. We called this the Social Envy Coefficient. The greater the number, the higher the levels of social envy in a society. France has the highest coefficient (1.21), followed by Germany (0.97). In the United States (0.42) and Great Britain (0.37), social envy was far less pronounced.

4. Do you think the media play a large role in determining what people think about very wealthy people?

Zitelmann: We also analysed media representations of the rich. For example, we analysed depictions of rich people in Hollywood movies. Rich characters in Hollywood movies are usually portrayed as immoral people who are willing to climb over dead bodies to make more money. But I think that the prejudices against rich people we identified would exist even without the media. A society that promises equality will only ever be able to deliver legal equality, not social equality. In the end, there will always be inequality because people have different abilities. But less successful people don’t all react the same: some see rich people as role models and strive to emulate them; others target the rich with envy. And envy is essentially an admission that someone else has something you would like to have yourself. This recognition leads to the question – and the potential damage to your self-esteem it may well provoke – of why you don’t have that thing. And this, in turn, explains why most people are unwilling to admit that they are envious.

5. It seems very much to be true in the UK, that people don’t mind footballers and pop stars being paid vast sums, but are less happy about the high salaries paid to business executives. Do you think this could be because everyone knows what footballers and popstars do, but there is no similar wide understanding of what goes on in business?

Zitelmann: Yes, there’s definitely some truth in that. Everyone can judge a footballer’s performance because they can watch them play the game. In contrast, people don’t see or understand what senior business executives do. Many people have what I call an “employee mindset”: They believe that salaries are (or should be) determined by the effort and time someone spends on a job. This matches the experience of workers and salaried employees. But the sums paid to the CEOs of large companies are based on supply and demand in a tight market for top talent. Unfortunately, many people simply don’t understand this.

As part of our study, we presented our respondents with a list of different groups of rich people (athletes, pop stars, lottery winners, bankers, etc.) and asked who they thought deserved to be rich. It was interesting to note that enviers had no objections to lottery winners being rich. To most people, this seems illogical, because all a lottery winner ever did was put six or seven crosses next to some random numbers. But the explanation is psychologically simple: Enviers find it easier to accept someone becoming rich on the basis of pure luck because this does not arouse feelings of inferiority. After all, a wife will not nag her husband for not having chosen the winning numbers on the lottery.

6. One of the most pervasive economic fallacies is that of the zero-sum game, in which people suppose that gains by some must mean losses by others. Do you think that people regard wealth like that, and assume it can only have been gained for some by having other people made poorer?

Zitelmann: Zero-sum beliefs are the basis of all socialist beliefs. Our study also revealed that enviers usually subscribe to zero-sum beliefs. They think the rich are only rich because they have taken wealth from the poor. This misconception is perfectly expressed in the poem by Bertolt Brecht:

“Said the poor man with a twitch:

Were I not poor, you wouldn’t be rich”.

Incidentally, I recently wrote an article for Forbes.com on this very subject and explained why zero-sum beliefs are so fundamentally wrong. 

7. In your books, Dare to Be Different and Grow Rich and The Wealth Elite, you look at people who’ve made it against the odds. I spotted a personality pattern emerging. What did you determine were the character traits that made these people stand out?

Zitelmann: You’re absolutely right: Many rich people are nonconformists. In many cases, they even love swimming against the current of prevailing opinion. Or at least they don’t care a jot for what the majority thinks. And this is quite logical. After all, if you do what everyone else does, there’s no way you’ll get rich.

8. Do you think there are things we could do, either in the educational system or outside it, that might make it easier for people to develop these character traits?

Zitelmann: Teachers will never be able to teach students entrepreneurship. They are so far removed from entrepreneurship: they went to school, then studied and then went back to school. Business life is usually a very, very alien concept to them. I would suggest that every week an entrepreneur should go to school and tell the story of their company: How they started their own business, why they love being an entrepreneur and what challenges they face.

9. You point out in The Power of Capitalism that capitalism has done more than any other idea in history to lift people all over the world out of poverty and deprivation. Yet the fact is that too many people don’t understand that, and actually oppose capitalism. Was our message too weak? And if so, how might we improve it?

Zitelmann: In school and university today, students get to hear a lot about the supposedly negative sides of capitalism and almost nothing about the cruel sides of socialism. In the first chapter of The Power of Capitalism I write about the biggest socialist experiment in history, Mao’s Great Leap Forward. In the lectures I give all over the world, I ask young people if they have ever heard about what Mao did. The vast majority have never even heard of the Great Leap Forward, despite the fact that 45 million people died as a result! At the same time, I also think it is important for proponents of capitalism to be self-critical: Our messages are often too abstract, too theoretical. And strangely enough, most libertarians have little understanding of PR.

10. I rather like your suggestion that the intellectual class only values intelligence that can be communicated in books and lectures, but doesn’t spot the practical intelligence that successful business people have, one that is learned in the real world. Does this mean that academe must always be left-wing, and indoctrinate students with false ideas?

Zitelmann: Of course, that doesn’t necessarily have to be the case, there are also a number of pro-capitalist intellectuals, like myself, for example. But the majority of intellectuals will always reject capitalism. This is not only true for left-wing intellectuals, but also for many right-wing intellectuals. Anti-capitalism is the identity-giving religion of intellectuals. I reveal why this is so in the much-praised tenth chapter of my book The Power of Capitalism and in this article. 

11. Why do you think so many young people find socialism appealing, even though it has led to poverty and repression whenever it has been tried?

Zitelmann: Young people don’t know enough about the failures of socialism. But how could they? They don’t learn about it at school. And socialists have developed a very effective trick. After every failed socialist experiment, they say: “Sorry, that wasn’t really socialism. Things will work out much better next time”. Kristian Niemietz describes this mechanism in his excellent book, Socialism: The Failed Idea that Never Dies.

12. Many left wingers claim that “pure socialism has never been tried”. Do you think pure capitalism has ever been tried?

Zitelmann: Pure socialism and pure capitalism do not exist and have never existed anywhere. Almost all systems are mixed systems. I compare this with a test tube to which the market and the state, capitalism and socialism are added. And then we look at what happens when you add more market (like in China over the last 40 years) or more state (like in Venezuela over the last 20 years). This is exactly what I do in The Power of Capitalism. Some libertarians dream of a “pure” capitalist system, perhaps even one without any form of centralized government whatsoever. I don’t believe in utopias of any kind. What I believe is that we have to dare much more capitalism – that the market has to play a far bigger role.

13. Some of the ideas that emerge from your book have echoes of Ayn Rand. Did her outlook have any influence on your own?

Zitelmann: I must admit that I haven’t read many of her books. But what I have read (especially her book about intellectuals) inspired me!

14. What would you say were the principal influences on your life and career, and on the development of your ideas?

Zitelmann: There aren’t really any specific books. The greatest influence on my life has always been my interest in history. For me, history is an incredible field of experimentation: you see what works and what doesn’t.

15. Did you always have a pro-capitalist, pro-business outlook, or was there a moment, an event, or maybe a book that led you down that path?

Zitelmann: No, no. I developed an interest in politics at a very early age. When I was eight years old I wrote a letter to the future Chancellor of Germany, Willy Brandt, and sent him political caricatures that I had drawn. At the age of 13, I was a Maoist, founded a Red Cell and published a newspaper (the Red Banner). Between the ages of 13 and 17, I read all the major works of Marx, Engels, Lenin, Stalin and Mao, including the three volumes of Das Kapital. I even gave courses on Marxist political economics to university-aged students who were members of the Red Cell. Later, as a university student myself, my opinions evolved. I wrote my first doctoral thesis on Hitler’s worldview, with a major focus on his social and economic policies. I proved that his ideas were far more anti-capitalist and pro-socialist than historians had previously assumed. My doctoral dissertation was awarded the highest possible grade, summa cum laude, and was also published in English, as Hitler: The Policies of Seduction. 

Unfortunately, the book is no longer available in English and I am currently looking for a publisher to re-release it. I returned to the subject three years ago and wrote an entirely new, 50-page foreword on more recent developments in the field of research on National Socialism. It would be great if a publisher contacted me about publishing the book with a new foreword in English again.

16. I’ve noticed that much of your research involves personal interviews and surveys or polls. Why did you choose that method of collecting data to support your case?

Zitelmann: I don’t think all that much of theories, although I have also put forward some theories of my own. Generally, I have a higher opinion of facts. Theories must always be derived from facts.

17. As a German yourself, do you ever get the impression that you often stray into the empirical approach that characterizes thinking in the English tradition, rather than the system-building more common in Continental thought?

Zitelmann: I recently wrote an essay on the importance of implicit learning for entrepreneurs for a scientific volume. This type of essay is always evaluated by two reviewers. One reviewer wrote: “Zitelmann’s essay is very Anglo-Saxon”. He meant it as a point of criticism. I took it as a compliment.

18. Have you ever been publicly attacked for your views? I don’t mean physically, but by abuse in print or online?

Zitelmann: Yes, in the early 1990s, some left-wing extremists in Berlin set fire to my car. Back then, I was editor-in-chief of Germany’s third largest book publishing group, Ullstein-Propyläen. I published a large number of conservative and liberal authors and that was reason enough for left-wing extremists to send me a dead rat as a warning and torch my car. They also weren’t happy that I had stressed Hitler’s socialist ideas. They stupidly thought that by doing so I wanted to put Hitler in a more positive light.

19. Do you have any ambitions as yet unfulfilled?

Zitelmann, Yes, many. The new and extended edition of my autobiography has just been published in German. The new last chapter is called “Conquering the World”. That’s meant to be a little bit cheeky, of course. But I do want my books and ideas to attract attention all over the world. And that’s why I give lectures in so many different countries, including the United States, South Korea, China and the UK. I give video interviews almost every day, but unfortunately the questions are rarely as good as the ones in this interview. I also write columns every week for Forbes.com, the French newspaper Le Point and the Italian newspaper Linkiesta. And, of course, I write a lot for newspapers in Germany and Switzerland.

20. Is it your view that capitalism will adapt and survive, and will reinvent itself to overcome the criticisms that many people currently make?

Zitelmann: By nature, I am an optimist when it comes to my own life. But right now, there’s not much reason to be optimistic about capitalism. In the 1980s, the world had a number of politicians who trusted the market more than the state: Thatcher, Reagan and Deng Xiaoping, to name but three. Today, almost everywhere you look, anti-capitalists and statists are in the ascendancy. Whenever I start to get overly pessimistic, I frequently think back on what Madsen Pirie once told me: Even if a whole host of countries become socialist, somewhere, perhaps in one small country, capitalism will emerge again and people will see that capitalism is not the problem, it’s the solution.

Not another bloody one: IfG calling for subsidy quango

The Institute for Government has released a new report calling for a new quango to replicate the European Commission’s state aid responsibilities. This would mean a British regulator having the power to determine what subsidies are – and are not – acceptable. 

From the perspective of domestic sovereignty, this would be preferable to leaving the responsibilities in the hands of the European Commission – the untenable demand of the EU in trade talks until recently. Just like any free country, Britain should have the ability to subsidise companies (albeit limited by WTO rules and trade agreements, and good sense). 

 The IfG are also correct to argue for strong domestic subsidy control to prevent devolved administrations, regions and cities from crony subsidy races – a commitment the UK Government has already made. 

We should also not sacrifice a trade deal with the European Union to subsidise domestic industry. As I wrote on CapX last week: this would mean Britain “punching herself in the face in order to have the freedom to shoot herself in the foot.”

The real challenge, once Britain regains this freedom, is to ensure we choose to not subsidise domestic industry. Just because you can, does not mean you should. 

Worryingly, the IfG envisages the test of whether a subsidy falls foul of competition to be much higher – enabling the Government to subsidise unproductive businesses, for “net zero, ‘levelling up’ and the tech industry”. They want exemptions for smaller subsidies to go unquestioned (because what’s a few million of taxpayer pounds here or there?) and to raise the threshold for what is harmful. This would, they claim, create a “more effective” system. More effective simply meaning more subsidies, according to the IfG.  This is because IfG believes there exists “good” subsidies and that there are faceless bureaucrats capable of deciding which fall into that category.

We should also wonder whether we need another bloody quango deciding these matters. It would more likely than not turn into a similar merry-go-round as the European Commission’s state aid proceedings – that ultimately lets countries undertake plenty of subsidies, effectively normalising mass handouts.

It would be preferable to have strong norms against state handouts than a toothless quango. This could be achieved by the Government adopting clear policies, enshrined in legislation, that prevent ministers from ‘picking winners’: giving hundreds of millions of taxpayer pounds to whoever hires the best lobbyists.

Unfortunately, it appears that this Government has the opposite intentions. The Prime Minister’s senior advisor, Dominic Cummings, has a mistaken belief that subsidising companies is the path to creating a billion dollar technology company in the United Kingdom.

Cummings’ plot has echoes of the International Computers Limited (ICL) fiasco. For decades, the UK Government pumped millions of pounds of subsidies into ICL to compete with the big bad American leader in mainframe computers, IBM. Former civil servant Martin Stanley, who led the Business Department’s industry/education team, has explained how:

“I inherited the sponsorship team and initially continued to pour as much money as possible into ICL and to arm twist the public sector to continue to buy its mainframes. But I eventually realised that the company was uncompetitive to the extent that well over 90% of its sales were to the public sector. In other words, any business that had a choice bought IBM. I understand that colleagues subsequently did their best to continue to support the company but it was essentially doomed and was eventually bought by Fujitsu.”

Stanley concludes that he has “absolutely no faith in ministers’ ability to withstand pressure to spend unwisely for political and constituency reasons… Equally, I have little faith in minister’s ability to focus support narrowly enough.” [sic] 

The moral of the story is pretty clear: the state should get out of the business of picking winners, and perhaps spend more time cutting taxes and red tape, if it wants the private sector to succeed.

What is the public benefit, the public good, of rural high speed broadband?

Something about this puzzles us:

Rural areas with slow internet speeds are in line for ultrafast broadband due to a £22.2m government funding boost.

The government's Gigabit Broadband Voucher Scheme subsidises the cost of building gigabit-capable broadband networks in remote areas.

We understand the benefit to the users of said high speed broadband. But that is, by definition, a private benefit. For the rest of us out here, us taxpayers, to be paying for it there has to be a benefit to us. Some public benefit, some public good perhaps, derived from people in the boonies being able to download cat videos.

It is rather difficult to see what that is. It is as with electricity supply, or water, sewage. It is possible to be so far out in those boonies that you, the individual living that rural lifestyle, must pay the extra costs of connection to the network. We all agree that electricity, water, they’re great things for an isolated cottage to have. But the benefit flows to those who have the electricity, the water, therefore they are the people who should pay for it. So too with broadband.

One response is that the costs are so high that people won’t pay to be connected. At which point if the people who benefit don’t think the thing itself is worth the cost of its provision then why should other people pay? We’ve just gained that proof perfect that it’s not worth doing. If it costs - say - £10,000 to connect you to the internet, you do not think being connected to the internet is worth £10,000 then we’ve just proven that we shouldn’t pay - whoever pays - £10,000 to connect you to the internet.

Other than buying a few - and it is clearly few because the very point is that the boonies are lightly populated - votes what actually is the justification here, the benefit that means we all get landed with the bill?

Why?

An odd insistence here:

England needs more houses, more social infrastructure and more genuinely affordable places to live – especially council housing.

We grasp the idea that England needs more houses. For it most certainly does and that’s what the recent reforms to planning permission are all about achieving. We agree that more affordable places to live would also be a good idea. Which building more houses achieves because if we increase the supply of something we decrease the market clearing price as everyone who has attended even the first lecture of that economics course understands.

So we rather go with the idea that the first thing, more houses, achieves the second, the more affordable bit.

It’s the next leap that makes us ask why? What do council houses have to do with this? Why is it that more 3 bed mansion flats to be occupied by the likes of Frank Dobson - who used to be the leader of the council that owned his flat - is a good idea? Why is it that councils, not social landlords, should run subsidised rental housing?

And, if all housing is to become more affordable due to the greater supply, does anyone think we need more subsidised housing anyway?

Perhaps someone could help us out here about the Good Friday Agreement

It’s a standard claim currently in British politics that the Good Friday Agreement commits to free trade on the island of Ireland. See Simon Jenkins :

Such a border would not just be near impossible to erect and unpopular across Ireland, it would be a gross breach of the 1998 Good Friday agreement, which pledged open trade.

We entirely agree that open trade is a very good thing, so much so that we spend a considerable portion of our time recommending the idea to all and sundry. It’s just that we’re wondering where that Good Friday Agreement insists upon anything quite so wondrous. The more formal name is the Belfast Agreement. The text of which is here.

Agreed, this result might be due to our age related inability to use anything complicated like the “search in this document function” but we find the one single use of the world “trade” in said document. It’s in Clause 34 and is part of the phrase “trade union” which we don’t think is really related to a gloriously free trade island of Ireland.

Could someone help us out here? Exactly where is this commitment to be found therefore?

Of course, if it is there is some form we cannot find then the solution is simple. We really do believe in open trade to the point that we continually recommend unilateral free trade. So, if it has been committed to then that’s what we do - declare unilateral free trade. This would mean that we would need to do so to all and sundry but then so should we do that anyway.

That is, we can’t see where the problem lies and if it is indeed there then the solution is win/win anyway.

Our assumption is that the difficulty being mentioned is something to do with politics rather than reality but then that is so often true, isn’t it?

Well, yes, obviously, what did anyone expect?

Despite the macroeconomic claims of that Modern Monetary Theory there is in fact no magic money tree. Something which BT is just proving again:

Faced with a share price collapse and a gaping pension deficit, BT will pass the cost of better broadband onto customers

Obviously, what did anyone expect?

The former state telecoms monopoly is to hike the price of its products by consumer prices index (CPI) inflation plus 3.9pc from March 31, raising hundreds of millions of pounds to help cover coronavirus costs and pay for broadband upgrades across the country.

...

BT shares nonetheless remain close to their lowest ebb in more than a decade amid fears over the costs of ultra-fast “full fibre” broadband upgrades and an ongoing review of its multibillion-pound pensions black hole.

Upgrading the broadband network is going to cost money, lots of it. Who is going to, who should, pay that bill? The people who use broadband, obviously. For there isn’t anyone else out there to do so. Even if we we start to insist that everyone should have broadband because it’s essential, therefore the taxpayer should pay. That’s still all - the users of broadband now being all of us by definition - paying for it, isn’t it?

We insist that consumers who upgrade from skirt steak to sirloin pay for it. We insist that those moving up from a £500 beater to a new car pay for it themselves. Moving from ASDL to fibre, get your wallet out. How could it be any other way?

Assar Lindbeck

Assar Lindbeck, who died aged 90 at the end of August, was a distinguished Swedish economist who at one time chaired the committee that awards the Nobel Memorial Prize in Economic Sciences. He is thought to have influenced the award of the prize in 1968 to James Buchanan, the Public Choice economist. 

Lindbeck’s research included work on self-destructive welfare state dynamics, dealing with the moral hazard of state welfare that undermines work and responsibility and leads to dependence of the state.

His was famous for his work on Swedish rent control, which he opposed for decades. The ASI has many times quoted his opinion that “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.” We have pointed out that it is in fact more effective than bombing because bombing takes out demand as well as supply. 

Rent control achieves this because it makes it unprofitable to let out property, leading investors to withdraw property from the rental market and invest in assets that bring better returns. It also leads to poor maintenance and more rapid degradation of property because not enough money is generated from rents to pay for the property’s upkeep. 

It achieves these effects everywhere it is tried, and it exposes a weakness of the political system, in that politicians bid for and secure the votes of current tenants, and are gone by the time rent controls wreak their inevitable damage. Lindbeck’s research convinced him that it should be markets, not politicians bidding for votes, that determine rent levels. He was correct.